KNOT Offshore Partners LP

Revenue was $92 million in Q1 2026. Operating income was $14.7 million, net income was $2.6 million, and adjusted EBITDA was $56.5 million. Management did not provide year-over-year percentage changes in the call. As of March 31, 2026, available liquidity was $140.7 million, consisting of $92.7 million in cash and cash equivalents and $48 million in undrawn capacity, up $3.7 million from December 31. Utilization was 97.2% excluding scheduled dry docking and 92% overall after the dry dockings of Tuva Knutsen and Bodil Knutsen. Guidance-wise, management did not give specific next-quarter or full-year financial targets, but said the Board will decide the next distribution after Q2 and that multiple gradual distribution increases could be supported over coming quarters and years if drop-downs and rechartering progress as expected.

Derek Lowe said the company has moved past a period of low payouts and is now focused on restoring and gradually increasing the distribution as charter coverage, liquidity, and refinancing work improve. He emphasized strong markets in Brazil and the North Sea, driven by FPSO start-ups, ramp-ups, expansions, and new developments, and pointed to a constructive supply-demand balance. His tone was cautiously optimistic, especially about backlog, charter renewals, and the potential for accretive drop-downs over the next 4 to 5 years.

Lowe said the quarter generated $92 million of revenue, $14.7 million of operating income, $2.6 million of net income, and $56.5 million of adjusted EBITDA. He noted that available liquidity was $140.7 million at March 31, with $92.7 million of cash and cash equivalents plus $48 million of undrawn capacity, and that liquidity increased by $3.7 million versus year-end. He also highlighted that the average margin on floating-rate debt in Q1 was 2.22% over SOFR, and said debt is being repaid at around $90 million per year. He added that changing vessel useful lives from 23 years to 20 years will increase depreciation going forward, but it is not a cash item.

Analysts focused on the pace and magnitude of future distribution increases, but management would not quantify any dividend growth, saying the Board sets distributions after each quarter and no number is available until after Q2. Questions also addressed whether a reopening of the Strait of Hormuz could change offshore development demand; management said it had no medium- to long-term view and expects people to remain cautious given changing news flow. On the supply side, management said the Brazilian ramp-up means newbuild inventory exceeds expected retirements, but acknowledged that the aging global fleet could still help tighten supply. When asked about the sequential revenue decline, management attributed it to the dry dock schedule and the terms of outstanding contracts.